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Health Insurance Rate Hikes In Store For 2016

Or... they could be. Insurers have just filed their requests for premium rate increases with the state’s health insurance commissioner. They’re only...

by Kristin Gourlay

Or... they could be. Insurers have just filed their requests for premium rate increases with the state’s health insurance commissioner. They’re only preliminary. And in years past the health insurance commissioner has denied some increases. But if experience is any guide, the average monthly premium for most plans will probably go up - in some cases by two-digit percentages.

It all depends on how you buy your insurance - on your own, through a small business, or through a large business.

They're chalking up the need for increases to higher medical costs overall, and in some cases more use of medical services. Also, insurers say increased taxes, and the phasing out of some Affordable Care Act-related payments, is contributing to increased costs - that they, in turn, must pass along to consumers. Most insurers are also citing a still-pending-in-the-General-Assembly tax to be assessed on every health insurance plan in Rhode Island to help pay for HealthSource RI, the state's online health insurance exchange.

You can review each insurer's proposed rate increase for every single type of plan here. But guess what! I've saved you the time. Here's the rundown, plus a quote from the insurer's own narrative (required by the health insurance commissioner) justifying those rate increases. Note: these are average premium rate increases. Individual rates will vary, of course. And, again, these are subject to approval and could change.

Individual plans:

Blue Cross and Blue Shield of Rhode Island: average rate increase of 17.9%; affects about 25,000 individuals. Why? “In addition to the medical expense increases described above [including the rising cost of medical care], the 2016 premium increase is also affected by increased costs due to the ACA [Affordable Care Act], including taxes and fees. A significant increase is due to the phase-out of the federal Reinsurance program. The Reinsurance program is a temporary program started under the ACA. It pays for a certain percentage of claims over a threshold amount. This program is very much reduced in 2016. It will be eliminated at the end of 2016. Also, a fee proposed by the state to fund HealthSource RI, adds a 5.6% increase to the rate [if approved by the General Assembly].”

Neighborhood Health Plan of Rhode Island: average rate increase of 8.6% , affects about 17,000 individuals. Why? “One key driver of premium increases includes increased medical costs on paid claims for our members....A second key driver of increased premiums includes an additional 7% increase in taxes and fees relative to 2015, associated with mandatory state and federal regulations for each health insurer offering individual coverage. The increase includes a state assessment which funds programs that benefit all Rhode Island residents. Also, new for 2016, a 4.7% [HealthSource RI] premium assessment is included in the filing to finance HSRI.”

United Healthcare: average rate increase of 11.1%.Why? “This product was first available January 1, 2015, so there is no existing financial experience. Although we do not have experience available for this product, we base our rates on the best information that we have available about the expected costs for these plans.”

Small group plans:

BCBSRI: 4.7% increase. Why? “The rate increase for 2016 is mainly due to the continued rise in the total cost of health care in Rhode Island....New drug treatments account for a large part of the increase in medical costs....While utilization has not risen at the rate we have seen in other years, the projected rise in the price of services means an overall increase in rates. Administrative costs factor into this filing as well as premium taxes paid to the state of Rhode Island. Taxes and fees associated with the Patient Protection and Affordable Care Act (“ACA”) add to the increase. This includes a fee proposed by the state to fund Rhode Island’s health insurance marketplace, HealthSource RI, adding a 1.1% increase to the rate.”

Neighborhood: Less than 1%.

United: 13.5% average increase. Reasons are similar to those given for the rate increase requested for individual plans.

Tufts: -2.5%. Why the decrease? "The premium decrease is driven by plan design changes we made to our products and changes to the Federal small group size definition. Due to the size definition change, sole proprietors will no longer be a part of the small group risk pool. Also, some groups previously defined as large will be defined as small. These changes offset increases in medical claims, standard administrative expenses, and taxes and fees associated with health care reform." Also, interestingly: "Medical claims are expected to increase by 6.2%. This is due to both increases in the number of services used and increases in the price of services negotiated with providers. We estimate the change in utilization based on an analysis of our historical data in the MA small group market. We have much larger small group enrollment in MA than in RI. Therefore, relying on MA data allows us to predict a more likely projection of future health care costs. The projected increase in the price of services is based on our specific contracts with Rhode Island providers. Medical claims are also expected to increase due to a new service being offered. Methadone Maintenance Treatment will be covered starting in 2016 in order to treat opioid addiction. [emphasis mine].”

Large group plans:

BCBSRI: 7.3%, affects about 90,000 people

United: 7.1%, affects about 18,000 people

Tufts: 7.2%, affects about 10,500 people

All of these are still just requests, and not approved increases. The state health insurance commissioner and her team of actuaries will review the proposals. Also, there's a chance for the public to weigh in. A public hearing on these rate increases is scheduled for June 22nd, 5:30 pm, at the Public Utilities Commission in Warwick.